Was 2018 the End of the ICO Market? Lessons from Booms and Busts Past
It’s ten years since the global financial crisis and nearly 20 years since the dot.com crash. We question if the crypto and ICO crash of 2018 compares, and whether we will ever learn.
Guest article by Owen Hall, CEO Heliocor
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All three boom and bust cycles were driven by wild optimism and overheated market madness. But whilst the global financial crisis has left a legacy of a lost decade and resulted in 10 years of tightened belts and suffering, the dot-com bust led to a change in the way society and the world functions so comprehensive, that today it’s difficult to imagine a time before the internet and connectivity appeared. In short, dot.com has revolutionized the world.
What the ICO Future Might Look Like – If It Has One
So what will be the legacy of the ICO — and will it leave a legacy at all?
As we look back over the last 24 months of crypto boom and winter, perhaps we should ask ourselves whether the impact will be negative or positive. It’s true, the last 24 months have been a roller coaster for crypto investors. What initially appeared to be a one-way ticket to riches has seen most investments wiped out. Other get-rich schemes were revealed for the Ponzi schemes they clearly were, whilst others were scams and fronts for criminal businesses.
Maybe we should have remembered the old adage — if it looks too good to be true, then it probably is.
But whilst Shakespeare was right when he said “all that glisters is not gold”, somewhere in there amongst all the get-rich-quick schemes there is some real gold. Genuine ideas and genuine projects buried beneath an avalanche of optimistic money are a few ideas and solutions that for some investors will lead to streets paved in gold.
For the lucky or perhaps more likely smart few, there are opportunities to buy into companies that will be the next Facebook, PayPal, Amazon, or Apple at very low prices. However we need to consider these as long-term investments, funding real growth. No one is going to get rich in a week or a month or even a year on these companies, but for those few, in a decade others will be envying their foresight and confidence.
So, what do these future stars look like? Well in truth they will follow rules, based on the fundamentals of many successful technology companies:
(1) A smart idea in a market where the new technologies and blockchain solve a real need that could not be satisfied before;
(2) Smart and experienced management teams with experience in delivering and the ability to execute;
(3) Sufficient funding to realize their goals — without investors feeling a need to bail out of their token investments before the business has had sufficient time for the market and ecosystem to emerge.
And what of those early ICO companies who raised millions? Will they succeed?
Quite frankly, unless they conform to the rules above, no they won’t. They will just (like so many companies in the dot.com period) burn through their cash reserves trying to deliver a solution the market neither wants or needs.
Mainstreaming Crypto’s ‘Mind-Bending Trip’
Some final thoughts: the ICO economy has been a “mind-bending trip”, but equally it has brought forward some significant and possibly structural changes to markets. And whilst next year’s flavor is going to be the STO rather than the ICO, the ICO concept isn’t dead — it’s just hibernating. There is a lot of logic in crypto tokens, but these tokens augment fiat currencies rather than try to replace them.
For such tokens and coins to succeed, they need to become mainstream. As a result, the level of volatility needs to fall, which mean they are investment grade assets rather than speculation opportunities.
The “crypto-anarchists” need to realize (or go away) that for any crypto coin or token to become mainstream they need to comply with governments, laws and regulators. No jurisdiction is going to be allow a coin to succeed if it undermines the conventional society and economy.
I think and hope that this crypto winter will thaw, leaving us with a legacy of business models and experience in which investors can invest — giving these few businesses the time and funds they need to grow and change the world in ways few today cannot foresee. There will be winners, and there will be (as there have already been many) losers. And whilst looking back at these losers ask yourself a question: in the cold light of day and viewing the opportunity through a sceptical lens, should you have invested in the first place? If the answer is still “yes”, then take a chance and hope that you have spotted the next game changer.
Do you agree with these opinions on the crypto economy? Feel free to sound off in the comments.
Images via Pixabay